Overall fundamentals look good for Japan, and most people in the industry expect strong performance ahead.
Most main stakeholders in the Japanese hospitality industry remain positive about market conditions across the nation, and it’s difficult not to agree. The past three years have seen a continued strong hotel growth in most of the contributing factors, something that clearly stands out when comparing other Asian and global countries.
A perfect storm
During the Deloitte Hotel Executive Forum in Tokyo recently, sentiments were positive. During a panel with global hotel groups, Guy Langford, vice chairman and U.S. travel, hospitality and leisure leader at Deloitte, described it as a perfect storm with a multitude of contributing factors:
- A surge in international arrivals mainly due to:
- a devalued yen making Japan even more affordable in recent times;
- visa deregulations that have enabled more Asian countries to come to Japan;
- Japan is a great destination, and the pent-up demand has been sitting there a while; and
- everybody’s trying to capture the Chinese travelers, and at the moment Japan is seeing a sharp increase.
- A limited supply—with such demand growth, occupancy is reaching new peak levels.
- Due to not only high construction cost but also expensive land, Japan has one of the smaller pipelines of new hotels compared to the existing supply.
- Logistics and diversity:
- There is now a larger diversity in the offering in Japan, but the already strong domestic travel situation has taken another big step in recent years with low-cost carriers enabling more affordable travel in the country. It used to be cheaper to travel to Japan than to travel inside the country.
Overall fundamentals look good for Japan, and most people in the industry expect strong markets ahead. Not only is it expected to continue to see an increase in tourist arrivals, but from a supply and demand balance standpoint, it would seem that any construction ahead of both the Olympics and the Rugby World Cup is a welcome addition, considering the expected demand growth.
It will remain important that Japan continues to invest in airport capacity upgrades but also an increase in airlift into secondary markets. The majority of tourists still are staying in the main cities where compression is quite high.
It also remains to be seen what the Japanese tourism boards can do to entice more foreigners to stay in ryokans, the traditional Japanese bed-and-breakfasts. After all, there are approximately 50,000 ryokans in Japan and only 10,000 hotels.
Ryokans play a big part domestically, but still foreigners are not using this segment as much.
Read full article at: Hotel News Now